Many taxpayers donate items, time, securities, and funds, and most of these taxpayers use the value of these donations to help reduce the amount of taxes owed on their tax returns. The government recognizes donations as deductible items for tax purposes, but some minimum information about the donation, such as the date of the donation, the name and address of the recipient of the donation, and the value of the donation, is required. In addition, some form of documentation for these donations may be required.
Typically, taxpayers manually track donation information. For example, donation records may be in the register of a checkbook, others in a file in a drawer, others in an electronic file on a computer, and still others on loose papers in a shoebox. In such cases, the taxpayer manually tracks and consolidates the donation records in the various locations in order to prepare tax documentation.
In some cases, taxpayers may use software applications to assist in tracking the donation records. However, the taxpayer is still required to manually enter the donation records and file physical documentation related to the donation. Further, the taxpayer may also use the software applications for recommendations to determine the tax consequences of particular donations.